An Introduction to the Patented. VX TM Cycle. Small-Scale Production of LNG from Low-Pressure Gas by Methane Expansion

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1 An Introduction to the Patented VX TM Cycle Small-Scale Production of LNG from Low-Pressure Gas by Methane Expansion A. What opportunities and problems does the VX TM Cycle address? The VX Cycle (short for Vandor s Expansion Cycle ) advances the cost-effective, small-scale (1,500 to 100,000+ gallons per day) production of Liquefied Natural Gas (LNG) from low-pressure natural gas. Applications of the VX Cycle include: Production of Vehicle-Grade LNG at any point on existing natural gas pipelines or LDC distribution infrastructure, allowing LNG to compete effectively with diesel fuel on a cost-per-energy-content (BTU) basis. In the U.S., LNG typically costs about $1.50 less per gallon than diesel fuel (on an energy-equivalent basis), and burns much cleaner. With the VX Cycle technology, LNG can be produced at LNG fueling stations (or at today s gasoline & diesel fueling stations) by connecting to an existing commercial natural gas distribution pipeline (or an extension thereof). Production of LNG for Inland Natural Gas Storage at any point on existing natural gas pipelines, allowing for greater availability, security and deliverability of natural gas to existing customers, including peak-shaving and expanded capacity of gas transport systems. Gas storage facilities (such as inland LNG terminals) also allow gas traders to be more profitable in their trading activities. Exploration & Production of Natural Gas at Stranded Gas Fields which are not close to existing pipeline infrastructure. The liquefaction of these stranded reserves (via the VX Cycle) allows the natural gas (in dense liquid form) to be cost-effectively transported by LNG tanker truck to existing natural gas pipelines, and re-gasified prior to insertion to the interstate/intrastate pipeline system. Stranded gas applications can utilize a skid-mounted VX Cycle unit that can be moved to other gas production areas once its work is completed at the original gas production field. Through this application, the VX Cycle can increase the value of natural gas in stranded fields by potentially tens of millions of dollars per field by making such reserves cost-effectively deliverable to the market. The VX Cycle can also be used as a stepping stone for high-potential gas fields that could support an extension of the natural gas pipeline system, but not until a sufficient number of gas wells in these new fields are drilled and producing. Liquefaction & Monetization of Flared Gas/ Associated Gas to increase revenues for oil companies (and others who flare gas) and to reduce the environmental impact associated with such flaring. The VX Cycle can be utilized to liquefy flared gas such that it can be cost-effectively transported to a natural gas pipeline. This represents a new revenue stream for many companies who today flare natural gas without monetizing its value. Offshore Liquefaction of Natural Gas on Oil & Gas Platforms. Utilization of VX plants on offshore oil & gas platforms can eliminate the need to construct expensive subsea gas pipelines from the platform to shore. The gas can instead be transported to shore as LNG a value-added product on a variety of ships or barges designed to carry LNG. Also see Section F of this report for additional discussion of VX Cycle applications. 1

2 B. How are these opportunities and problems currently addressed? Currently there are no commercially viable small-scale LNG plants (less than 10,000 liters/day) anywhere in the world. Existing LNG fleets (mostly in the US) depend on tanker deliveries from large-scale plants or import terminals, increasing the cost of the product and diminishing its environmental advantages. Moreover, the customer must maintain a large storage tank so that frequent deliveries can be avoided. Such tanks produce boil off which is vented to the atmosphere, causing methane emissions and loss of product, further increasing the cost of the LNG and substantially undoing the emission-reduction benefits of Alternative Fuel Vehicles (AFVs). Methane is a greenhouse gas that is orders of magnitude worse than CO2. One alternative is on-site Compressed Natural Gas (CNG) production. However, CNG is not dense, and cannot be stored in large quantities, so it must be made at a high rate during the peak demand period. Onboard CNG storage tanks are heavy, relative to the amount of fuel they store. C. How does the VX Cycle address these opportunities and problems? The relatively low capital cost of the VX Cycle and its high operating efficiency yields a cost-effective way to produce LNG at small-scale LNG plants. AFVs that deploy the VX Cycle can produce, store, and dispense LNG without depending on tanker-deliveries. The on-site LNG storage tank can also dispense L/CNG to existing CNG fleets that wish to transition to LNG in the future, and to off-site (light duty) vehicles. In addition to the above, neither large-scale LNG nor on-site CNG technologies are suitable for the stranded gas or flared gas opportunities that the VX Cycle can address. Thus, the VX Cycle is a substantial leap forward relative to other LNG and CNG technologies. D. How does the VX Cycle differ from current products, devices or methods? The smallest commercial LNG plants from competing providers produce approximately 25,000 gallons (95,000 liters) per day. By contrast, the VX Cycle is economically viable at retail production rates as low as 1,500 gallons (~6,000 liters) per day, allowing for distributed LNG production, providing vehicle-grade LNG to medium-sized fleets, without requiring that a portion of the plant s output be shipped off-site. Each VX Cycle plant can be an appliance serving one site. The VX Cycle s small scale and transportability is also what makes it applicable and cost-effective for stranded gas and flared gas applications, which other LNG methods and technologies cannot effectively address. VX Cycle plants cost substantially less than other LNG plants of equivalent capacities, and the capital cost per gallon of capacity decreases for larger VX Cycle plant sizes due to economies-of-scale. Operating costs are also low. The VX Cycle yields approximately 80% LNG from every unit of natural gas that enters the plant, with only about 20% of the gas used as fuel for the prime mover that converts the NG to LNG. (An 85:15 ratio of product-to-fuel is achievable for larger VX plants and/or where higher-pressure feed gas is available.) The combination of low capital cost and high operating efficiency yields an LNG price per gallon that can be sold at a substantial discount to diesel, on a BTU-equivalent basis. The small-scale production of LNG (when the LNG is used as a substitute for diesel) can also mitigate the current shortfall in diesel refining capacity (which is acute in certain regions). 2

3 E. How is the VX Cycle innovative? The VX Cycle assumes that a low-pressure (60 psia or greater) natural gas pipeline or stranded well is adjacent to the plant site; with a chemical composition that is 95% methane, with some N2 and CO2, but otherwise clean and dry. If the pipeline gas is not clean, there are several known clean-up steps that can be integrated with the VX Cycle. The low-pressure stream is separated into a fuel stream (say, 15%) for the prime mover (engine or turbine), and a product stream (85%) to be liquefied (or compressed). CO2 and water are removed in a multi-vessel molecular sieve, which requires periodic regeneration. The regeneration gas is sent to the prime mover for use as fuel. The cleaned gas is then sent to a multi-stage CNG compressor, such as used at existing CNG stations. This is the first innovation in the VX Cycle: 1. The use of a CNG station and/or standard CNG equipment to produce LNG. The VX Cycle allows existing CNG stations to be upgraded to LNG production. A network of small-scale LNG plants need not displace all existing CNG facilities, allowing for a smooth transition from low-density CNG to high-density LNG, including the continued dispensing of L/CNG to light-duty vehicles. The feed gas is compressed, in stages, from 60 psia to approximately 400 psia. That choice is an essential feature of the invention because up to 3,500 psia is routinely provided by most CNG compressors. Operating a CNG compressor at lower pressures reduces its workload and the heat of compression. The CNG compressor is both the feed gas compressor and the recycle compressor. This is possible because the VX Cycle is an all methane cycle, where the working fluid (refrigerant) and the feed stream are both methane. This is a major advance in LNG production, because the only LNG plants that now use methane cycles are let-down plants. Standard let-down plants do not require compression because they rely on high-pressure feed gas, and have the opportunity to send out large quantities of low-pressure gas into local low-pressure pipelines. The VX Cycle uses a uniquely integrated absorption chiller to counteract the heat of compression and to pre-cool the CNG immediately after it exits the compressor s after-cooler. That unique use of a wellestablished technology (absorption chilling) is the second innovation as follows: 2. Heat of compression is mitigated, and the natural gas is pre-cooled by an absorption chiller powered by waste heat from the prime mover. The third innovation is the unique integration of the prime mover, the compressor and the absorption chiller: 3. The front-end engine, chiller, and CNG compressor is linked, each to the other two components, allowing standard CNG equipment to produce cold, moderate pressure CNG. The VX Cycle exploits the limitations of low-pressure methane compression-to-expansion, without using refrigerants such as N2 in nitrogen expansion cycles; or mixed refrigerants in MR cycles; or hydrocarbons in cascade cycles; and without the inefficiencies of high-pressure Joule Thompson (JT) cycles. The VX Cycle achieves a good degree of the efficiency of turbo-expander (let-down) LNG plants, but at much lower capital costs, and without a high-pressure inlet stream or a low-pressure outflow sink. The fourth innovation is found in the back-end of the VX Cycle: 3

4 4. Joule Thompson valves and a turbo-expander are integrated at the back-end to convert the cold CNG into LNG. In order to achieve -250 F LNG at 65 psia, significantly more refrigeration is needed than can be provided by the front-end chiller. Two sources of refrigeration are at work near the main heat exchanger. The first is a throttle valve. The pre-cooled CNG at +/- 400 psia is sent through the main heat exchanger where it is cooled to -170 F by the other streams within the exchanger. That combination of approximately 400 psia and -170 F allows for plate fin heat exchangers rather than the more-expensive coil wound units. A portion of the -170 F stream, at +/- 400 psia, is sent through the throttle valve, which yields approximately -254 F vapor and liquid at a pressure of only 19 psia. That cold vapor + liquid stream is used to sub-cool the portion of the stream that is still at -170 F and 400 psia, cooling it to -251 F and still at +/- 400 psia. The sub-cooled product is dropped in pressure to 65 psia; forming LNG at -250 F, which can be sent to the storage tank, without any flash (vapor) formation. The low-pressure stream that cooled the main product stream in the sub-cooler is sent back toward the beginning of the process as part of the recycle stream. Prior to its return trip through the main heat exchanger, the recycle stream is mixed with the recycle stream from a compressor-loaded cryogenic methane turbo-expander the second source of refrigeration. The turbo expander is needed because JT refrigeration is not efficient enough. The expander converts cold CNG to colder, lower-pressure natural gas by doing work. Both the throttle valve and the expander function well with the 400-psia inlet pressures. The 400 psia is a comfortable inlet pressure for a small expander. The selected refrigeration methods, and the conditions at which they operate, yield an excellent balance between refrigeration produced, the size and temperature of the recycle stream, the workload of the CNG compressor, and the total LNG produced per unit of fuel used to run the plant. Innovation #4 uniquely applies known JT and turbo-expander technology to a small-scale LNG plant in a specific, optimal manner: The VX Cycle uses the main CNG stream as a working fluid (refrigerant) to liquefy a significant portion of the stream, returning a recycle portion for re-compression, but only after several cold recovery steps. F. What are some typical applications of the VX Cycle technology? The following is a partial list of end-use applications for the VX Cycle: LNG for Vehicle Fuel Utilizing a VX Cycle plant to replace diesel & gasoline fuels with lower-cost L/CNG fuel (adjusted for Btu content) can yield exceptionally fast payback periods (often less than 1 year). Applications include: Municipal & DOT fleets, such as buses, taxis, heavy trucks and sanitation trucks The increasing numbers of passenger cars fueled by LNG and CNG worldwide Military fleets, especially those vehicles that tend to remain on base Commercial truck and van fleets Harbor and port service vehicles including tug boats, and yard mules at the port Airport bus & truck fleets Off-road fleets and heavy equipment, including construction and mining equipment On-ship LNG re-liquefiers 4

5 Inland Gas Storage Terminals Production of LNG at any point on existing natural gas pipelines, allowing for greater availability, security and deliverability of natural gas to existing customers, including peakshaving and expanded capacity of gas transport systems. Stranded Natural Gas Production & Transport Exploration & production of natural gas at stranded gas fields which are not close to existing pipeline infrastructure. The liquefaction of these stranded reserves via the VX Cycle allows the natural gas (in dense liquid form) to be cost-effectively transported by LNG tanker truck to existing natural gas pipelines, and re-gasified prior to insertion to the interstate/intrastate pipeline system. Natural gas that would otherwise be uneconomical to bring to market becomes cost-competitive via the VX Cycle, greatly increasing the value of such gas reserves. Offshore Liquefaction of Natural Gas on Oil & Gas Platforms Utilization of VX plants on offshore oil & gas platforms can eliminate the need to construct expensive subsea gas pipelines from the platform to shore. The gas can instead be transported to shore as LNG on a variety of ships or barges designed to carry LNG. Moreover, VX plants on offshore platforms produce a value-added product LNG that the market is typically willing to pay significantly more for than non-liquefied natural gas. Monetization of Flared Natural Gas Capture and liquefaction of flared natural gas from oil fields and other sites (whether onshore or offshore), such that the gas can be cost-effectively transported to a pipeline and monetized. This also reduces the emissions impacts of such flared gas. Contact Information David Vandor, CTO & Managing Director 26 Leroy Avenue Tarrytown, NY 10591, USA Telephone: Jeremy Dockter, Managing Director 305 West Broadway, Suite 261 New York, NY 10013, USA Telephone: